Incidents. The company disclosed its report for the first quarter of 2024 on April 24. In 24Q1, the company achieved operating income of 540 million yuan (YOY = 23.58%) and net profit to mother of 74 million yuan (YOY = 87.73%), corresponding to a year-on-year increase of 4.66 pct to 13.63%.
Revenue grew rapidly, and profit performance was impressive. On the gross profit side of revenue, 24Q1's revenue reached 540 million yuan (YOY = 23.58%), and gross margin increased 4.04 pct to 30.02% year over year, so gross profit reached 162 million yuan. On the cost side, the company's sales expense ratio increased by 1.24 pct year on year, management expenses increased by 0.02 pct year on year, and R&D expenses increased by 0.21 pct year on year, so the company's cost ratio increased by 0.49 pct to 17.33% year over year. Furthermore, the company's income tax rate decreased by 0.87 pct year on year, so net profit to mother increased by 87.73% year on year to 74 million yuan, corresponding net profit margin to mother increased 4.66 pcts year on year to 13.63% year on year.
23 years of steady omni-channel development. In 23 years, the company has continued to promote the steady development of traditional offline distribution channels, modern channels, emerging channels, and three-dimensional omnichannel online channels. Furthermore, the company has made every effort to promote the development of weak channels and the upgrading and transformation of dealers, and strengthen the construction of a national distribution system for terminal dealers. Furthermore, in the face of the slowdown in traffic growth in traditional e-commerce channels, the company adopted refined operations, improved the product structure, closely followed the development trend of new media, laid out emerging channels such as short videos, social platforms, and live streaming by celebrities, and established a communication matrix from top traffic to self-broadcast delivery, and achieved a double increase in brand and sales.
Over the past 24 years, we have continued to focus on single product development and continuously strengthen supply chain capacity building. In 2024, the company will continue to focus on deepening the cultivation of Chinese-style casual snacks. Focus on the core “2 billion grade single product” Jinzai deep-sea fish to lead the recreational fish products industry and raise the “ceiling” of the company's market competition; second-curve quail eggs focus on product innovation and branding development to move towards the second “billion grade single product” goal; diversify the development of “200 million grade single products” dried beans, dried shredded meat, and “100 million yuan grade single products” and “konjac”, continuously innovate to give full play to the company's core advantages of independent manufacturing. Furthermore, in 2024, the company will continue to increase the overseas supply chain of raw materials for fish products. For products such as poultry products and soy products, it will also improve the upstream raw material supply chain layout, provide a foundation for the company's rapid growth, and enhance the company's competitiveness.
Profit forecasting and investment advice. We estimate that in 2024-2026, the company's revenue will be 25.93/32.83/4.082 billion yuan, and net profit to mother will be 298/398/519 million yuan, respectively, and the corresponding EPS will be 0.66/0.88/1.15 yuan/share, respectively. Based on the valuation situation of comparable companies, considering the good performance, the company was given a PE valuation of 20-25 times in 2024, corresponding to a reasonable value range of 13.20-16.50 yuan/share, and continued to be given a “superior to the market” rating.
Risk warning. (1) food safety risks, (2) increased market competition, and (3) new channels and new market expansion fell short of expectations.